Today, when it comes to purchasing Bitcoins you usually go to a Bitcoin trading platform (e.g. Bitstamp and Kraken) or a Bitcoin broker (e.g. Coinbase and Coinmama). However, some of these exchanges just don’t cut it – either because of their geo restrictions (for example Coinabse doesn’t accept people from many countries) or their accepted payment methods.
In this case you can always use networks of Bitcoin sellers from around the world that allow almost anyone to buy Bitcoins. This network can be best described as “the eBay of purchasing Bitcoin”.
Today, I’m going to review the platform that supplies this kind of service – Paxful (the “Uber of Bitcoin”).
The company was founded by Artur Schaback and Ray Youssef in the summer of 2015 and is based in 3422 Old Capitol Trail, Wilmington, Delaware. Paxful is a peer-to-peer Bitcoin marketplace that became widely known after they helped sex workers to accept Bitcoin as payment system after MasterCard and Visa stopped lending their services to Backpage.
In its core, Paxful is very similar to LocalBitcoins, where anyone in the world can trade fiat for Bitcoin or vice versa. The state of New York is the only exception and jurisdiction where they cannot operate because they do not have the required BitLicense.
As I already said, the site is not focused on a specific region. However, some countries like the USA, Russia, India, Nigeria, and China are highlighted in their homepage, in “How to buy Bitcoin in …” sections.
Paxful helps to connect buyers and sellers to easily exchange Bitcoin, accepting more than 300 different payment methods that include Facebook Messenger, Apple Pay, gift cards as well as more traditional methods like your debit card, online wallet or cash.
Setting up an account on the site is a very straightforward process and can be done in two ways: by filling directly the registration form available on their website, or automatically, after providing an e-mail not yet registered in their database during the checkout in a purchasing process. Users are also asked to click the confirmation link sent to the registered email and to set two security questions.
It’s important to note that users can alternatively verify their mobile phone number and activate SMS notifications. They can opt for being notified of a broad range of activity related to their account via email. However, only alerts about critical movements are sent via SMS.
Notifications that are sent via email are not encrypted. They even send passwords as plain text. An automatically assigned password is given to users that register as they purchase Bitcoin. Also, they are not forced to change it after they first log in.
Paxful operates in more than 100 countries all around the world, giving you many options when it comes to currencies that you can trade for Bitcoin.
The Types of Transactions That Paxful Supports
Bitcoin is a digital currency, so all transactions are delivered into your Paxful e-wallet.
You can use one of more than 300 payments options to buy Bitcoin, including:
- E-wallet balances
- Gift cards
- Credit or debit cards
- Cash deposits
- Bank transfers
- Money transfer services like MoneyGram and Western Union
To see a full list of payment methods that sellers can choose to accept visit Paxful’s website.
How Buying Works on Paxful.com?
Technically, you can purchase with any currency and pay with a wide variety of methods ranging from credit / debit cards and bank transfers to a broad number of cash deposits and gift cards. Perhaps, in practice, there are not offers for all the possible combinations because the site works in a P2P fashion. As an example, a quick search for offers in Korean Won or Fijian Dollar yielded no results.
There are no offers for KRW. I did not see that coming!
The site is open to buy with any currency. However, only Bitcoin may be sold. The supposedly cool thing about Paxful is that there are no fees for the buyer. However, it’s a bit naive to say that there are no transaction fees because most sellers just portray these fees inside their exchange rate. It should be taken into account that for uncommon payment methods the conversion rate is usually far lower than the market price. In other words this means that the buyer pays a commission to the seller.
We received this generous offer because we were not able to buy with FJD: receiving barely 61% of what we would pay in USD.
How Selling Works on Paxful.com?
0.001 BTC is the minimum amount that Paxful allows any vendor to offer, no matter their verification level. The site takes 1% from the total sale amount from the seller, taken automatically from the user wallet and sent into escrow along with the amount to be purchased by a client during a trade.
The site has an internal reputation system. This system allows users to rate their experience with each other during a trade. Once a particular vendor has reached 50 trades with more than 20 different partners and if he has high responsiveness and his success score is over 33%, he can apply to become a verified vendor. The feature is only available to Europeans, Australians, Canadians, and Americans. The verification process takes up-to seven days. Also, the requirements have had slight changes since the platform launch. Check the corresponding entry on the Paxful knowledge base here to read more about the process.
How Paxful.com Protects Its Users?
Paxful has solid security measures in place to safeguard the Bitcoins in your wallet and they also partnered with BitGo in order to secure its hot wallet by using multi-sig.
These measures, which are standard at the most reputable Bitcoin exchanges, include security questions, 2-factor authentication, SMS verification, and heavily-encrypted servers.
Keep in mind that these measures aren’t impenetrable and that a talented, motivated hacker can still potentially get into your account. There are no reports the site been ever hacked. However, according to Cointelegraph, one of its founders was recently arrested on weapons and drugs charges.
The site also has a review system, which is similar to ones used at Amazon and eBay. This system is a good way to identify trustworthy and reliable sellers because you can tell, at a glance, how many transactions a seller has completed, as well as the number of positive and negative comments left by buyers.
User Experience on Paxful.com
I’ve found the user interface to be completely intuitive and clean. It offers an intuitive distribution of the options and a minimalistic menu and adapts smoothly to any screen size.
Every important feature is clearly labeled, so there’s no confusion regarding how to get started, whether you want to purchase Bitcoins or sell them.
Within your account dashboard, you’ll find easy-to-read buttons that’ll direct you to where you need to be to set up 2-factor authentication, or buy BTC, send or receive them. There’s also an ever-present “Help” section that is clearly visible, within which a relatively comprehensive FAQ is included. Additional aids for the user include a 24/7 live chat and a support forum.
The forum itself seems quite active and threads on the forum receive replies often. However, perhaps some of the answers are not as relevant as one would want.
Regarding the chat, a small caption indicates that replies take 10 minutes on average. However, it is not actually a live chat, you wait much longer for a representative to answer.
The Paxful forum is full of scam accusations against other users. Someone also posted a thread on Bitcointalk, warning about the modus operandi of those scammers.
There are also some accusations on Bitcointalk against the site itself that claim funds to have disappeared from wallets with no reason given by customer support. Here is one started by the legendary users irfan_pak10, and a second one started by also legendary user kashish948, both active members of the forum. Someone suggested on one of those threads it was BitGo’s fault, yet the reputation of Paxful seems to be mixed.
Paxful added a “reviews” section to their site as a strategy to improve their image. In this section positive reviews from their own users are highlighted. The page is just another testimonial page. Its credibility is no higher than that of the company itself.
Paxful became known thanks to a particular niche and have been loyal to their vision. All things considered, Paxful is quite a powerful platform and is considered to be a fair alternative for “normal people” to buy and sell Bitcoin.
- 300+ payment methods that include cards, cash and Facebook.
- A wide variety of currencies accepted
- Low fees
- Easy to join and simple to use
- Available worldwide
- Customer support is slow
- High commissions charged (by the seller) for purchasing Bitcoin in non-mainstream currencies or with uncommon methods
- Mixed user reviews
- Potential for scammers